Archive for category: Ideas & Advice

Owning a mansion sounds like a fantasy. You can almost picture your kids (or yourself) sliding down the opulent banister like Mary Poppins. Of course, when that tires you, you can retreat to your library, study, conservatory, or any number of the spacious interior or exterior sanctuaries your manse is sure to have. While this all sounds great in theory, and the prices of mansions are holding or even falling in some markets, mansion life can come with some unexpected costs.

According to the latest Luxury Defined report, which comes from luxury real estate leader Christie’s International Real Estate, the average starting price for a luxury home in the United States ranges from $1 million+ in the Atlanta area to $8 million+ in the Los Angeles metro area, but don’t think that’s the all-included pricing. No, these megahomes come with some mega carrying costs, and prospective homeowners can find themselves in financial troubles quickly if these costs are not planned ahead of time.

Tax Collector Comes Calling

The only sure things in life are said to be death and taxes, and no matter where you call home in the United State, you’re probably going to be paying property taxes. While the  scale runs from states with an extremely low tax rate (like Louisiana at 0.18% or Hawaii at 0.26%) to the top taxers in New Jersey (1.89%) and New Hampshire (1.86%) these taxes are applied to the value of the home and are collected every year. Alternatively, some states have decided to forgo statewide property taxes and instead allow counties, cities, and municipalities to collect these taxes. Additionally, some areas have adopted a “transfer tax” in lieu, or sometimes in addition to, annual property taxes. This transfer tax is charged when the property changes hands and often works on a stepped scale based on sale price.

But if you’re buying a mansion, there might be another tax to be paid on your home. Some states have adopted a so-called “mansion tax” or an additional surcharge on homes over a certain value. In addition to the standard property taxes levied on all properties in an area, some locales have decided to increase the rate for those above a certain value.

Maintenance is Essential 

So you’ve picked up your very own mansion. Congrats! While you’re probably busy dreaming of the best paint color to accent the custom murals on your walls, you might want to make a little more space for maintenance costs. The bigger the estate, the bigger the fees to keep it in good condition. Many megahomes have multiple HVAC systems, high-tech surveillance systems, and extensive outdoor areas like pools, tennis or basketball courts that all require upkeep. Instead of worrying about one refrigerator going out in standard home, a megahome could have two or three kitchen where any number of things could go wrong. Groundskeeping also factors in to the maintenance costs of a home and while, depending on the estate size and location, the annual costs can approach those of a small golf course. This financial burden is, of course, not always something that is thought about ahead of time and can quickly lead into troublesome waters for a new owner.

Bills, Bills, Bills

If you’re relocating from a townhouse or condo in the city to a palatial country estate, you may be in for quite a surprise the first time the utility bills come due. In many shared living arrangements, utilities can be covered by a general fund or included in the price of rent. Even when utilities are not covered, the price of heating and cooling a standard 1,700 square foot home and a 50,000 square foot mansion with 12 foot ceilings is going to be drastically different. You can expect to see this extreme difference in everything from water and electricity costs to gas and cleaning supplies.

 It Takes a Village

On top of all the previously mentioned costs, it’s also important to think about who will do the work. Typically an expansive home requires at least some staff. Many elect to have at minimum a housekeeper and landscaper, but also employ a security guard, personal chef, and additional groundskeepers. While this amount of manpower makes perfect sense with a home the size of a small hotel, the costs add up quickly.

Living in the lap of luxury seems like a dream, but it’s important to remember that the home you choose should be an investment into your future, not a burden. The costs add up quickly, and if you don’t plan properly, you could up in a bad situation for a long time. Just ask 50 Cent.

Want to learn more about choosing the home that’s right for you? Check out our blog, How Big of a Home Do You Really Need? Ready to buy? Check out the great selection of luxury homes available now by clicking here. 

The real estate industry can be completely mystifying to an outsider (and sometimes even the insider), but some secrets are more tightly kept than others. Here are some of the best kept secrets about the real estate industry that you should know.

• You need a Buyer’s Agent — Stat!

So you’re in the market for new real estate, congratulations! One of your first steps should be to find a real estate agent that you trust. While you can try handle your full transaction by yourself, the NUMBER ONE biggest secret in real estate is actually threefold. 1). The listing agent (the agent representing the property) is legally obligated to work for the seller’s best interest so even if they offer to help you out, they are working for the seller. 2). The seller pays for both their listing agent and the buyer’s agent. That’s right, as a buyer you don’t pay for an agent who will solely represent your best interests. 3). Even if you don’t sign an agreement with anyone or know about it, a real estate agent may still financially benefit from your transaction due to a common “referral” practise. Long story short, if it’s not going to cost you anything and it might happen anyways and it’s in your best interest, you should probably do it. Check out Questions to Ask a Buyer’s Agent for how to choose the best agent for you.

• If you want to be taken seriously, lay the right groundwork

Before you start talking to agents, you should get a pre-qualification, pre-approval, or proof of funds letter. These letters, obtained through your financial institution of choice, help to show agents that you are serious about your purchase as well as help you to know what you can afford. These documents serve as proof that you have the financial backing necessary to complete a transaction and signal to an agent that you are a true buyer, not just a looker. While very similar, there are a few differences in these documents. Pre-qualification is the least serious of these letters. There are no hard credit checks required for pre-qualification and no guarantees that what is on the letter is actually the amount you would get, but it is, essentially, a solid guess at the amount you could qualify for. A pre-approval letter requires more information from you and a hard credit check, but the result is that you will know exactly how much money your financial institution would be willing to give you for your purchase. These are both applicable if you intend to finance your purchase, but if you’re a cash buyer, you’ll want a “Proof of Funds” letter. This is a statement from your financial institution that states that you have in your account a certain amount of funds.

• Referral fees exist and you might be missing out

Did you know that if you are referred to one real estate agent by another real estate agent, the first agent will get paid when you buy or sell with that second agent — even if all they did was make the introduction? Referral fees have been common in the real estate industry seemingly forever, but consumers are often completely oblivious. Often this information has been treated with a “what they don’t know doesn’t hurt them” mentality, but the tides are turning. RealtyHive is pioneering a platform where you can refer yourself as a buyer or seller and in turn reap the benefits of this referral fee system. Real estate agents benefit from this platform because this is the exact same system they are accustomed to and they are able to connect with buyers and sellers who really want to talk to them (rather than getting information from people who were tricked into submitting contact forms) and buyers/sellers benefit by getting what would be a referral fee paid back to them as cold hard cash back at closing.

• There could be things your agent isn’t telling you

Real estate agents are licensed professionals and as such have to abide by certain rules, regulations, and laws. One of the laws that especially shape the industry is the federal 1968 Fair Housing Act. This act aims at ending discrimination in housing, but has repercussions beyond the intent. For a more complete overview of possible things your agent can’t tell you (and how to find out yourself) check out 5 Surprising Things Your Real Estate Agent Can’t Tell You.

• The final sales price will be higher than you thought

Congratulations! You found the right property and had your offer accepted (or you accepted an offer on your property). You just need the check for the agreed upon sales price and you’re done, right? Wrong! One of the biggest surprises to buyers and even sellers, especially first timers, are all the costs that come with a real estate purchase. While you can negotiate to have the buyer or seller cover some of the cost, there are fees that are not built into the sales price that will need to be paid. Some of these include closing fees, lender costs, mortgage fees, title insurance, any taxes or outstanding utilities  that need to be paid, and potentially more. It’s important to keep this all in mind when looking at properties so that you don’t overreach on what you can spend. This is something that a Buyer’s agent would be able to help with (see Number 1 on this list!)

Ready to start your home search? Make sure to visit Cashifyd.com to get on the waiting list for your opportunity to get cash back at closing when the Cashifyd app officially launches or start searching now by clicking here.